Financial burden is not a reason sufficient to invalidate the retrospective operation of Payment of Gratuity (Amendment) Act, 2009

Karnataka High Court: While passing the order in a writ petition under Articles 226 and 227 of the Constitution challenging the retrospective operation of the Payment of Gratuity (Amendment) Act, 2009, a Single Judge Bench comprising of Ashok B. Hinchigeri, J. held that the newly substituted Section  2(e) and the newly inserted Section  13-A of the said Act cannot be struck down as unconstitutional on the ground of their retrospective operation.

Learned counsel for the petitioner submitted that the Act cannot traverse backward in time for a period of twelve years. It could not confer gratuity upon the teachers, who have retired prior to the coming into force of the said amendment. He submitted that the Amendment Act over reaches the judicial powers of the Court, it defeats a series of binding judgments of the Supreme Court on how the definition of an employee does not cover the services of a teacher.

The Court negatived the contentions put forth by the counsel for the petitioner and held that there is always a presumption in favor of the constitutionality of an enactment and burden is upon him, who attacks it, to show the clear transgression of constitutional principals. The Court categorically held that an Act of legislature can be struck down only either due to lack of legislative competence or due to violation of fundamental rights or any other provisions of the constitution.

The Court referred to a judgment of the Supreme Court in Ujagar Prints v. Union of India, (1989) 3 SCC 488, in which it was held that validating and curative exercise made by the legislature cannot be called an impermissible legislative overruling of the judicial decisions. The Court also held that payment of gratuity is one of the minimal conditions of service, which must be available to the employees, notwithstanding the financial capability of the employer. The Amendment may cause financial burden on the schools who will have to pay gratuity to the retired teachers, however that may be not a reason sufficient to set at naught the retrospective operation of the Amendment.

Accordingly, the constitutionality of Section 2(e) and Section 13-A was upheld. [Sarvodaya Education Trust v. Union of India, Writ Petition No. 39434 of 2013, decided on August 3, 2017]


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